Israels
settlement programme in the Occupied Territories has been justified both in terms of the
historic and religious right of the Jewish people to the land of Eretz Israel
and as a project for enhancing the states security.

Historically, settlements have been aimed at complicating, or even
making impossible, any potential peace negotiations. They are designed to make the Jewish
presence in the Occupied Territories a permanent reality and to prevent the transfer of
the land of the Occupied Territories out of Israeli control. Settlements and bypass roads
have been built around the major towns and cities of the West Bank and Gaza Strip to block
the expansion of these Palestinian population centres, and to inhibit unified political
action on the part of the Palestinian people. Israel has constructed a ring of Jewish
settlements surrounding Jerusalem, designed to separate Arab East Jerusalem from the rest
of the West Bank and to make it impossible for Jerusalem to serve as the capital of a
Palestinian state following a final peace settlement. Israel has pursued its settlement
programme with the express goal of making the emergence of an independent Palestinian
state a virtual impossibility.

Israeli government and settlement leaders have made no secret of the
political and strategic rationale behind settlement building, frequently explicitly and
publicly outlining their objectives. Excerpts from a five-year plan for Jewish settlement
of the West Bank published in 1980 by the settlement department of the World Zionist
Organisation illustrate this:

The best and most effective way of removing every shadow of doubt about
our intention to hold on to Judea and Samaria [the West Bank] forever is by speeding up
the settlement momentum in these territories. The purpose of settling the areas between
and around the centres occupied by the minorities [Palestinians] is to reduce to the
minimum the danger of an additional Arab state being established in these territories.
Being cut off by Jewish settlements, the minority population will find it difficult to
form a territorial and political continuity.

Similarly, Israeli political leader Ariel Sharon writes in a letter
contained in a brochure for Netzarim settlement in the Gaza Strip, [s]trategically,
massive Jewish settlement in the Netzarim area will dissect the Strip into two parts, and
connect the Negev with the sea. Settling in Netzarim is today the key to and guarantee for
our continuing hold on the entire Strip, and constitutes a vital obstacle to the autonomy
plan.

According to Israeli strategic thinking, therefore, settlement building
is today all the more urgent in light of the impending final peace settlement with the
Palestinians. As noted by the current Israeli Minister of Finance Dan Meridor,
...[i]t is clear that if we are serious in our intention not to return to the 1967
lines, words alone will not suffice. Settlement is one of the things that determines the
map of the country. Therefore, if we stop settlement in one place or another it means that
we have surrendered that place.

Israeli settlements are concentrated in three areas: 1) along the
Jordan River, serving as Israels eastern security border, and separating
the West Bank from Jordan, 2) along the Green Line,particularly in areas
within commuting distance of Tel Aviv and Jerusalem, in order to alter the pre-1967
borders and to ensure the annexation of portions of these border areas in the event of a
final peace settlement, and 3) surrounding major Palestinian population centres.

Neve Dekalim Settlement

The total population of Israeli settlers in the Occupied Territories is
estimated at 150,500 in the Gaza Strip and West Bank, excluding East Jerusalem, with a
further 200,000 in East Jerusalem.These settlers live in 144 settlements,most with a population not exceeding 500. Fourteen urban settlements account for 60
percent of the total settler population.

Israel militarily occupied the West Bank and Gaza Strip in 1967.
Shortly thereafter, Israeli Deputy Prime Minister Yigal Allon presented an internal plan
to the government, known as the Allon Plan, which would serve as the Labour-led
governments guide for settlement policies in the Occupied Territories during the
decade that it remained in power. The plan called for Israels annexation of about
one-third of the West Bank, including a 12 mile wide security belt along the Jordan River
and the Dead Sea; an area north of the Jericho-Jerusalem road, including the Latrun
salient; much of Greater Jerusalem and the Judean desert; and the Gaza Strip.
The Strips sizeable refugee population would be relocated, possibly in the West
Bank, or in el-Arish, along the Sinai peninsulas Mediterranean Coast. The densely
populated areas of the Occupied Territories would form a demilitarised area in a
Jordanian-Palestinian entity.

Settlements built by the Labour-led governments of 1967-77 were
concentrated in the areas Allon had designated for annexation. The location of these
settlements was consistent with Israels explicit objective of imposing Israeli
sovereignty on what it has called Greater Jerusalem as well as approximately
40 percent of the West Bank. By the time the Labour party left office, almost 100
settlements had been established in the Occupied Territories, and almost 60,000 Jews had
settled across the former border (all but approximately 7,000 of these had settled in
annexed East Jerusalem).

With the Likud governments ascent to power in 1977, the focus of
Israels settlement program shifted and intensified. Whereas previous governments had
attempted to avoid building near major Palestinian population centres, the Likud
government began to build settlements around and in between Palestinian towns and cities
both in order to prevent their expansion, and to cut these population centres off from one
another. Roads subsequently built to these settlements by both Labour and Likud
governments bypassing major Palestinian population centres have served much the same
purpose.

Two main Likud proponents of Israels settlement programme in the
Occupied Territories, Prime Minister Menachem Begin and Ariel Sharon (appointed Minister
of Defence after the 1981 elections), determined that relying solely on ideologically
motivated Jews to settle in the Occupied Territories would not result in a settler
population large enough to meet their objectives. Thus, after the 1981 elections, they
began to invest tremendous financial resources in a new strategy seeking to draw Jews to
the Occupied Territories for pragmatic reasons, constructing settlements within easy
commuting distance of Jerusalem and Tel Aviv and offering housing in the West Bank and
Gaza Strip at heavily subsidised prices. This strategy contributed to the large-scale
expansion of the settler population in the Occupied Territories.

An expected influx of immigrants following the collapse of the Soviet
Union, and a desire to change the facts on the ground before US Secretary of
State James Baker and the Bush administration achieved success in their push for a
regional peace process in the aftermath of the Gulf War, led to a housing boom in the
Occupied Territories which began in 1990 and continued until the election of Yitzhak Rabin
as prime minister in 1992.

In June 1992, Israeli Prime Minister Yitzhak Rabin committed Israel to
a freeze on the creation of new settlements in order to secure $10 billion in loan
guarantees from the United States government. Among the exceptions Rabin made to this
commitment was building in East Jerusalem and other settlements Israel considers essential
to its security, expansion in already-existing settlements due to natural
growth, and ten thousand settlement housing units in an advanced stage of
construction at the time the ban was imposed.Rabin also took no action to halt
private construction in the Occupied Territories, which continued at about 1,200-1,500
units annually during his administration.

Although the Labour administration withdrew national priority
area status (entailing rights to various subsidies and financial incentives) from
many settlements, a number continued to enjoy this status throughout the entire Labour
administration. Among the areas whose privileged status the administration chose to leave
largely intact was the Gaza Strip.

The population of Jewish settlers in the West Bank and the Gaza Strip
expanded considerably during the four years of the Labour administration. Based on
information published by the Israeli Central Bureau of Statistics and according to a
report issued by the Israeli Peace Now movement, the number of Jewish settlers increased
by 39 percent during the Peres and Rabin administrations. More than 100 settlements
increased their populations during Labours rule. According to the Israeli Central
Bureau of Statistics, while total population growth in Israel in 1994 was 2.7 percent, the
growth in the settler population was over triple this figure, at 9.8 percent.
Israels land confiscation and settlement in East Jerusalem in particular accelerated
during the tenure of the Labour government. During the 1992-94 period, the settler
population in the Gaza Strip experienced an almost 20 percent increase.

Rabin made a public distinction between political and
security settlements, with the latter referring to those settlements he
believed should be permanently annexed to Israel, namely those in the Jordan River Valley,
the Greater Jerusalem area, and along the Green Line. Political
settlements referred to the generally small and isolated settlements, often established
under Likud governments, scattered throughout the Occupied Territories and often in the
midst of Palestinian population centres. It should be noted that all Israeli settlements
in the Occupied Territories are political and are designed to permanently alter the
borders dividing Israel from the Occupied Palestinian Territories.

The Labour government envisioned annexing and achieving exclusive
Israeli sovereignty over the settlement areas along the Green Line serving as bedroom
communities of Tel Aviv, the area of Greater Jerusalem and the densely
populated settlement areas such as Maale Edumim and Gush Etzion on its outskirts, a
security zone along the Jordan Valley, and settlement blocs like Gush Katif in the Gaza
Strip. Settlement which continued under the Labour administration despite its declared ban
on settlement expansion was concentrated in these areas.

From mid-1992 to the end of 1994, an Exceptions Committee
headed by Advisor to the Minister of Security Noah Kanarti was authorised to approve
building in the settlements not allowed for by the Rabin administrations ban. The
committee approved the construction of hundreds of units, including units in a number of
particularly controversial settlements during its tenure. At the beginning of 1995, this
committee was largely replaced by a Ministers Committee, authorised to
approve the building of homes in the settlements. According to a recent report by Peace
Now, this committee approved the building of 3,942 housing units in the West Bank, further
accounting for the increase in the settler population witnessed under the previous Labour
administration.

According to another report issued by the Israeli Central Bureau of
Statistics, published on 28 May 1996, one day before the Israeli elections, the number of
Israeli settlers in the Gaza Strip and the West Bank, excluding Jerusalem, who have the
right to vote increased by 60 percent from their number in the previous election.
According to the report, while there were 47,000 registered voters living in Jewish
settlements during the 1992 elections, that number had increased to 74,000 by the 1996
elections. The number of settlers in the Gaza Strip and the West Bank, excluding
Jerusalem, increased from 105,300 in 1992 to 146,000 by the end of May 1996 when the
Labour government left office. Annual government spending on settlements and related
expenditures (such as bypass roads) during the Labour government administration increased
to NIS 1.4 billion ($43 million), as compared with NIS 500 million ($156 million) during
the administration of the previous Israeli government from 1988-92.

As noted, private construction in the Occupied Territories continued
with the approval, co-operation, and usually subsidised participation of the Israeli
government during the Labour administration. The Israeli government has control over and
exact information about private construction in the territories. Permits for private
construction of homes must be approved by the civilian administration in the Occupied
Territories and other official government bodies, and government-subsidised loans are
awarded for such homes.

The governments ban on settlement expansion also did not prevent
the expropriation of thousands of dunams of Palestinian land for the building of new
bypass roads allowing Israeli settlers to avoid Palestinian population centres. Since the
signing of the Declaration of Principles in 1993, more than 80,000 dunams of Palestinian
land have been expropriated for the building of bypass roads.Like the
settlements themselves, these bypass roads create permanent facts on the ground, and are
part of Israels continual activities to prejudice the final status negotiations in
violation of the accords. The bypass roads, many of which are strategically placed to cut
off the possibility of expansion for Palestinian towns, are designed to further the
cantonization of the Occupied Territories, and to make the removal of the settlements
impossible.

After the signing of the Oslo Accords (and again after the
assassination of Prime Minister Rabin), a movement led by Peace Now, Meretz members, and
even some Labour Party members to assist settlers wishing to leave the settlements
appeared to be gaining momentum. In 1993, for instance, there was a 62 percent increase in
the number of Israelis leaving the Occupied Territories, with 6,800 settlers leaving in
that year.In both instances, the Labour administration discouraged this
movement, likely wishing to maintain the settlers presence in the Occupied
Territories for future bargaining positions.

Prime Minister Binyamin Netanyahu and the Likud government elected in
May 1996have publicly declared their commitment to the building and expansion
of Israeli settlements in the Occupied Territories.

In its weekly meeting of 2 August 1996, the Israeli Cabinet voted
unanimously to cancel restrictions on building and development in settlements in the West
Bank and Gaza Strip. Accordingly, Israeli Defence Minister Yitzhak Mordechai approved the
setting up of 298 mobile homes in a West Bank settlement on 12 August, which was seen by
many as a precursor to further expansion of the settlement. The government justified the
addition of the mobile homes, the first step taken to implement the cabinet decision to
lift the ban, by stating that the homes were to be used for educational purposes in
anticipation of the new academic year, and should not be viewed as a measure taken toward
settlement expansion.

On 9 August 1996, a plan prepared by the Israeli Ministry of Housing
for the expansion of settlements in the West Bank and Gaza Strip was unveiled. The
ministry took action to implement the first phase of this plan by approving the sale of
3,000 housing units frozen by the previous government. These units will be able to absorb
approximately 10,000 settlers. The second phase of the plan calls for the construction of
buildings which have obtained the necessary permits, but whose actual construction had
been suspended by the previous government. The third phase of the plan would implement the
Prime Ministers call for the building of settlement blocs along the bypass roads
begun by the previous government, whose declared purpose is to guarantee the safe movement
of settlers in the Occupied Territories and sustain Jewish building in the Territories. On
27 August 1996, Minister of Defence Mordechai approved a plan for the building of 900
housing units in Kiryat Sfer, just west of Ramallah; approval was subsequently granted for
a further 900 units, bringing the total number of units approved for the expansion of
Kiryat Sfer to 1,800. On 26 November, Netanyahu visited the second-largest settlement in
the Occupied Territories, Ariel, vowing that he would continue to develop Israeli
settlements.

Construction site of a new community centre in Kfar Darom. Though
construction began with privately raised funds, the Netanyahu administration released
money for its completion following the September 1996 clashes.

Similarly, the new Israeli government accelerated its campaign of
confiscation of Palestinian land in order to build bypass roads to Jewish settlements in
the Occupied Territories, allocating NIS 250 million for these roads for its first year of
government.The Israel Defence Force (IDF) continues to increase the number of
military orders issued for the expropriation of Palestinian land across the West Bank and
Gaza Strip.

In response to the killing of an Israeli settler and her son in the
West Bank, the Israeli government declared on 13 December 1996 that settlements whose
status as National Priority Areas (entailing massive housing subsidies and
financial incentives for settlement residents) had been withdrawn during the Rabin
administration would have that status restored.

Newspaper reports in February 1997 indicated that the Israeli Defence
Ministry was sponsoring the establishment of settlements without official Israeli
government approval. The Israeli daily the Jerusalem Post reported that a Defence
Ministry plan had already led to the takeover of a hilltop military outpost in the
northern West Bank by yeshiva students from a military preparatory college with the
intent to turn it into a civilian settlement. The plan reportedly calls for military
outposts in the Occupied Territories to be taken over as civilian settlements by youth
movements and is aimed at instilling motivation in Israeli youth and encouraging
youth to take part in national and security missions and to strengthen their value
of settlement.

Finally, during the spring of 1997, the Israeli government began its
controversial East Jerusalem settlement project on the hill known as Har Homa in Hebrew
and Jabal Abu Ghuneim in Arabic. In late February 1997, the Israeli government approved
the construction of approximately 2,500 units at the site. The 1,850 dunam site was
expropriated by the Shamir government in 1991, and is ultimately slated to hold 6,500
units housing approximately 32,000 settlers, along with hotels and commercial buildings.
The project has been strongly opposed by Palestinians as it would constitute the last in
the ring of settlements which circles East Jerusalem, cutting off the city from the rest
of the West Bank. It is perceived to be an attempt to pre-empt the final status
negotiations which are to take place regarding the ultimate status of the city.

The project has been strongly condemned by the international community
and has brought the peace process to a months-long standstill. United Nations Security
Council resolutions condemning the construction were prevented by U.S. vetoes on 6 and 21
March 1997. On 13 March, the United Nations General Assembly condemned the planned
construction in East Jerusalem by an overwhelming vote of 130-2 (and two abstentions),
with only the U.S. and Israel voting against the resolution. On 25 April, after an
emergency session (the first such session held since 1982), the U.N. General Assembly
condemned Israel for the Har Homa project for a second time, and demanded an immediate
halt to its construction. The vote was 134-3 (and 11 abstentions), with the U.S., Israel,
and Micronesia voting against.

Despite the public rhetoric of the Netanyahu administration and the
almost daily press reports concerning settlement expansion, the extent to which the plans
for Israeli settlement expansion would actually be implemented on the ground was initially
unclear. Most current construction in the Occupied Territories is actually taking place on
projects approved by the Labour administration, mostly in the Jerusalem area or along the
Green Line.

However, throughout the spring of this year, information has become
available which gives a clearer picture of the Netanyahu governments plans for the
Occupied Territories. PCHR has learned that the Netanyahu administration has released
funds for construction in the Gaza Strips extremely controversial Kfar Darom. Two
reports issued by Peace Now in the first week of June charged that massive construction
taking place in the West Bank was proof that Prime Minister Netanyahu was intent on
bringing about a total collapse of the peace talks.

This Israeli government, through the Minister of Defence, has issued
final approval for over 2,200 new residential units. The largest block of approvals is for
1,800 units at Kiryat Sfer, an ultra-orthodox settlement. In addition, the Netanyahu
government has issued intermediate approval for nearly 3,000 units and preliminary
approval (the third step of a five-step process) for over 4,000 units, including large
expansions in the Greater Jerusalem area. Finally, as mentioned above, the Israeli
government issued final approval for the settlement at Har Homa, where 6,500 residential
units are to be built. Counting approvals, either final or preliminary, and the 3,000 West
Bank units unfrozen in the fall of 1996, this government is thus responsible
for putting almost 19,000 residential units in the pipeline or on the market for sale.

This construction is clearly being carried out as part of a final push
at changing the facts on the ground in advance of final status negotiations. That this is
the case was made even more evident by news reports issued in May 1997 concerning high
vacancy rates in many settlements in the Occupied Territories, even as a massive effort to
construct additional units was taking place. In May 1997, the Israeli daily Haaretz
published details of a survey carried out by the U.S. government in the Occupied
Territories which reportedly found that 26 percent of housing units in West Bank
settlements and 56 percent of housing units in the Gaza settlements were vacant. According
to information released in March 1997 by Peace Now, even the Israeli Central Bureau of
Statistics records a 40 percent vacancy rate in Gaza and a 12 percent rate in the
settlements overall.

Policy statements issued by the Netanyahu administration indicate that
it will probably not begin a campaign to establish new civilian outposts in the Occupied
Territories, and that it is more likely to expand existing settlements. However, with the
change in administration, the signal has gone out to settlement leaders that the Israeli
government is unlikely to respond directly to unilateral action on the part of settlers.
Settlers have already established at least two new settlements on their own,and
caravan placements near Ofra and Mizpe Yeriho also appear to represent new settlements. In
May, settlers at Yitzhar, yet another West Bank site, re-built unauthorised structures
torn down by the Israeli authorities. The failure of the Netanyahu government to respond
to this direct challenge to its authority over settlement expansion is likely to inspire
the creation of still further settlements in the Occupied Territories.

Although settlement leaders frequently express their frustration with
what they have called the slow pace of settlement expansion under the Netanyahu
administration to the media, it is clear that the relationship between settlers and the
Israeli government has changed dramatically under the new Israeli administration. Asked to
discuss the differences between the previous Labour administration and the Likud
government, Yesha Council of Jewish Communities in Judea, Samaria, and Gaza spokeswoman
Yehudit Tayar stated,

You cant compare the two. During the last two years we were not
in a dialogue with the government...We were ignored...The Prime Minister [Netanyahu] --
when he ran for office committed himself to represent all of the nation of Israel. Of
course were frustrated, but you cant compare the situation on the
ground...Were going to see a defrosting and the end of the choking phase...We have
to exert constructive pressure...[But] were part of [Netanyahus] national
picture.

According to U.S. government assessments, Israel spent $437 million on
settlements in fiscal year 1993, $311.8 million in 1994, $303 million in 1995, and $307
million in 1996. Private sector investment in housing and industry is not included in
these sums.

A significant portion of these budgets is directed toward Israeli
government financial incentives for settlements in the Occupied Territories, which
continue to draw settlers across the Green Line. First implemented under the post-1977
Likud government, these incentives were created when it became clear that ideological or
religious motivations alone would fail to attract the numbers of Israelis necessary to
fully implement Israels settlement programme. Housing subsidies were the primary
tool with which the government sought to pull Israelis to the Occupied Territories, and
tended to attract young couples who would not otherwise have been able to afford their own
homes and who were able to settle in settlement blocs within easy commuting distance to
Jerusalem and Tel Aviv.

The amount of financial incentives available in a particular settlement
(as determined by the development priority status it is awarded) is inversely related to a
settlements proximity to one of Israels major metropolitan centres and its
desirability as a settlement destination. Although Rabin withdrew top priority status from
many settlements during his administration, he left this status largely intact for those
regions which he envisioned annexing in a final peace settlement. Prime Minister Netanyahu
restored national priority status to all settlements in the Occupied Territories.

In addition to housing subsidies, incentives to settlement expansion
include income tax reductions for resident and even non-resident Jewish workers in the
Occupied Territories, low-interest loans, subsidies for water, electricity, and personal
telephone services, grants to cover moving expenses, and security provision by the IDF.

A house in the West Bank is on average two to three times cheaper than
a comparable home in Israel. All settlers in the Occupied Territories have long received a
7 percent income tax reduction (this continued under the Rabin administration), while
settlers living in settlements classified with A status may receive up to 20
percent reductions in their income tax. Settlers living in settlements classified as
A and B priority settlements receive $20,000 grants toward their
mortgages (many of which are only $35,000-$50,000 to begin with) after five years.The
Israel Lands Authority sells settlers rights to plots of land expropriated from
Palestinian landowners at 5 percent of their assessed value.

Teachers receive salary increases ranging up to 80 percent and
subsidised transportation to the Occupied Territories if commuting from Israel.Municipal
and Regional Councils located in the Occupied Territories receive a 5 percent increase in
government assistance to their budgets.Educational services are reported to be
far superior in settlements than in Israel, with smaller class sizes, better school
facilities, and subsidised bus transport.

Sixty percent of employed adults in the settlements are employed in the
public sector, as compared to 33 percent in Israel.Numerous religious
institutes have been established in the settlements to employ settlers, while the
education ministry is another top employment provider for settlers. In 1995, the number of
government positions per capita in the settlements was 60 percent higher than in Israel
proper, with 2,650 government positions available for the 147,000 settlers in the West
Bank and Gaza Strip, and 70,000 government positions available for the 5.5 million
Israelis living on the other side of the Green Line.Religious councils,
supported by public funds, employed settlers at a rate 60 percent higher than in Israel.

This massive subsidisation of the settlements has been carried out at
the expense of all Israelis. One publication, Everything you didnt want to
know about settlement on the West Bank, noted that Israeli taxpayers pay between
$120,000 and $150,000 for each settler to move to the West Bank, an amount three times
that received by families moving to development towns in Israel.In 1994,
settlers, who constitute 2.4 percent of the population of Israel, received 12 percent of
Israels domestic budget.

Due to the political motivations for government spending in the
Occupied Territories, financial support for the settlements is often wasteful. Prime
Minister Rabin noted in September 1992, The government of Israel in the last year,
this year, and next year will need to buy 42,000 housing units for which there is no
buyer...It will cost 8 billion shekels [$3.3 billion], and we dont even know when it
will be possible to use them in an effective way. Rural settlements in isolated
locations must be supplied with roads, water, electricity, telephone service, schools,
health clinics, etc., and are even more burdensome on the Israeli taxpayer.

Government financial and administrative support is also provided for
industrial and agricultural development in the Occupied Territories. Industrial
development is encouraged by, inter alia, government subsidisation of project
development, provision of highly subsidised or free land for industrial projects in the
Occupied Territories, and benefits and tax holidays for investors. According to Meron
Benvenistis West Bank Data Project, for instance, industries in the Occupied
Territories received a 40 percent grant for the purchase of equipment. Government support
has led to the establishment of ten industrial parks with more than 250 factories in the
Occupied Territories.Three centres for research and development, primarily
funded by the Israeli Ministry of Trade and Industry, have been established in the
Occupied Territories.

Government agronomists are provided to advise settlers engaging in
agriculture, and the government provides agricultural land at subsidised prices to
settlers. Settlers building greenhouses in the Occupied Territories receive 40 percent of
the cost of construction from the government.Government subsidies and
investment incentives for industrial and agricultural development in the settlements have
adversely affected local Palestinian industry and agriculture, which have found it
difficult to compete with these heavily subsidised sectors.

Historically, the vast majority of Israeli housing in the Occupied
Territories is the result of public construction undertaken by government entities. After
implementing the ban on new settlement building in 1992, Rabin took the government out of
the housing construction market, and construction in settlements was turned over to the
private sector. Private sector construction, however, is still very much controlled by the
Israeli government. Decisions to build are made by the Israeli government, which also
allocates state land for construction. Proposals are put out for bid by the
Israeli Ministry of Housing, and are then undertaken by private contractors.

Thus, published government expenditures and declarations are a
misleading indicator of government spending and support for the settlements. Private
construction companies purchase land rights from the Israeli government at artificially
low prices, so that the government provides a subsidy to both private contractors and
settler purchasers. The Israeli government continues to heavily subsidise housing built in
this manner, providing public services for these settlers such as roads, schools, clinics,
water, electricity, telephones, security, and subsidisation for agricultural and
industrial development. Private construction assisted the Labour administration in
circumventing its own declared policy and continuing the large-scale expansion of the
settler population.

In addition to Israeli government funds, financing for the settlements
is raised through private donations. Some of the $1 billion in private tax-deductible
donations made annually by American citizens to Jewish charities is directed to the
building and expansion of Israeli settlements in the Occupied Territories.

According to a report submitted by the PNA Ministry of Information to
President Arafat, since 1967, Israel has confiscated almost 3 million dunams from the
total area of the West Bank and Gaza Strip (a total area of 6 million dunams).
Furthermore, the report stated that 300,000 dunams of land in the West Bank and Gaza Strip
were confiscated in the three years following the signing of the Oslo accords in September
1993.Palestinian land in the Occupied Territories is confiscated not only for
housing units in Jewish settlements, but also for bypass roads, green zones,
industrial zones, and for military purposes.

Land for Jewish settlements in the Occupied Territories has been
acquired through a variety of methods, the most effective of which have been the seizure
of land for military purposes or because it has been declared absentee
property or state land (see below). Land over which Israel assumed
control from the Jordanian government following the occupation of the West Bank in 1967
and Palestinian land purchased privately by Jews has also been directed for use in Israeli
settlements.

Until 1980, Israel justified its programme of land acquisition in the
Occupied Territories primarily on Article 52 of the Hague Convention, which allows an
occupying force to requisition lands temporarily for the needs of the army of occupation.
The Israeli military authorities played a critical role in the early acquisition of land
for Jewish settlement, acquiring large amounts of land for security needs, and
subsequently turning over much of it for use for Jewish civilian settlements.

The legality of this process was challenged in 1979, when the Israeli
Supreme Court considered a Palestinian petition concerning land which had been
expropriated for security reasons and subsequently turned over for civilian settlement.
The Palestinian landowners who brought the case argued that the establishment of a
civilian settlement at Beit El, located near the town of Ramallah in the West Bank,
indicated that there was not a continued military need for the land. The military
government countered that the land should be retained, stating:

The establishment of the settlement in the area of Beit El camp is not
only not inconsistent with, but actually serves military need as part of the
Governments concept of security, which bases the security system inter alia
on Jewish settlements...In times of peace and tranquillity these settlements mainly serve
the need for presence and control in vital areas, for maintaining observation
and the like. Their importance increases particularly in wartime, when regular military
forces are generally moved from their bases for operational needs, and the said
settlements form the principal elements of presence and security control in
the areas in which they are located.

The Supreme Court accepted the Israeli governments argument that
the function of civilian settlements was essentially military, and dismissed the
Palestinian claim. The court apparently did not view the permanent nature of Israeli
settlements to be inconsistent with Article 52s requirement that land be
requisitioned only temporarily by the occupation army.

A second landmark Israeli Supreme Court case, challenging the legality
of a settlement in the northern West Bank known as Elon Moreh, was brought in 1979. The
Courts ruling in this case led to a major shift in Israeli methods of land
expropriation.

In accordance with the proven success of justifying settlement
construction in terms of security, the Israeli government argued that Elon Moreh would
promote Israeli security and was therefore a legal settlement. This argument was
undermined by the testimony of several military figures that the settlement of Elon Moreh
did not, in fact, serve any security purpose. Rather, these experts argued, the settlement
might actually compromise Israeli security in time of war, as troops would have to be
committed to protect its civilian residents.

Ironically, the governments argument was also countered by the
settlers themselves, who informed the court that their primary purpose in establishing the
settlement was not to promote the security of the state of Israel, but to assert a
territorial claim to the West Bank. Forced to determine that Elon Moreh did not in fact
serve Israeli military need, the Court ruled the settlement illegal. Its ruling, based on
Article 52 of the Hague Regulations, indicated that private Palestinian-owned land in the
Occupied Territories could not be confiscated without a viable security justification.

In the wake of the Courts decision, which had demonstrated the
legal vulnerability of settlements established upon land expropriated for military
purposes, Israeli authorities began to employ a new and highly effective strategy for land
confiscation. This new strategy, based on obscure laws dating from the Ottoman period
regarding state land, may best be characterised as one of legalised theft. In
May 1980, the Israeli cabinet agreed that all unregistered and uncultivated lands in the
Occupied Territories would henceforth be declared to be state land and thus to be subject
to seizure and use for Israeli settlements. State land is supervised by the Custodian of
Government and Abandoned Property, and is routinely signed over to bodies such as the
World Zionist Organisation, the Israeli Ministry of Housing, and to individual building
contractors for use in Israeli settlements.

The burden of proving ownership of land declared to be state land falls
upon the Palestinian landowner, and Israel has sought to use the lack of specific legal
documentation of land ownership in the Occupied Territories to maximum advantage. A
project to register land in the West Bank begun by the British and continued under the
Jordanians had succeeded in registering only one-third of the land in the territory before
an Israeli military order issued shortly after the occupation in 1967 ordered an end to
the project. The seizure of so-called state land has led to the confiscation of land
belonging to countless Palestinian farmers or herders who, though long-recognised as
landowners (whether by custom or contract), do not possess the documentation required by
Israeli authorities. A survey of the West Bank taken after the Elon Moreh decision by the
Israeli government determined that the status of 1,500,000 dunams, or 26 percent of the
West Bank, was uncertain, and thus eligible for designation as state land.
According to settlement expert Khalil Tufakji, approximately 1,700,000 dunams have since
been appropriated in this manner.

In addition to the two primary strategies described above (turning over
land seized for military purposes to civilian settlements, and, subsequently, confiscating
Palestinian-owned land determined by Israeli authorities to be state land), land has been
acquired for Israeli settlements in the Occupied Territories through several other
methods. An Israeli military order issued shortly after the occupation in 1967 gave the
Israeli Custodian of Absentee Property, through the Israel Lands Authority, the power to
confiscate all land and property belonging to Palestinian absentees, and to expel
occupants who the custodian determined had no right to occupy the land upon which they
were living. Absentees were defined as those who left the West Bank before, on, or after 7
June 1967. Under the leadership of Menachem Begin, the Israeli government issued a
directive to consider all Palestinian property-owners living anywhere but on the land
itself (whether in other Arab countries or in America or Europe) absentees. An estimated
430,000 dunams of West Bank land was acquired in this manner.

The Israeli government approved the private purchase of West Bank land
in September 1979. While some Jewish purchases of Palestinian land in the Occupied
Territories, including East Jerusalem, are legitimate (often involving sums reaching into
the millions of dollars), such purchases are often made under dubious circumstances. Some
have been made using forged or incomplete documents, and in other cases Palestinian
landowners have signed documents through deception or under threat of force. International
Jewish agencies such as the Jewish National Fund (the main governmental instrument for
land purchases) have raised money for Jewish land purchases in the Occupied Territories.
The Jewish National Fund receives a significant portion of its funding through
tax-deductible donations from American citizens.

A further 150,000 dunams were confiscated in the public
interest from Palestinians for use for the construction of roads, parks, schools,
etc., serving the settlers, while 250,000 dunams have been declared green
areas, or natural reserves, commonly allocated to Jewish settlements.

Master plans for settlements are often ambitious, and much larger than
the actual area upon which building has taken place. Through this method, the Israeli
authorities are able to issue land confiscation orders years before Palestinian landowners
are actually forced to vacate their property due to settlement expansion, thus avoiding
publicity and political controversy at the time the orders are issued. The master plan for
the largest Israeli settlement, Maale Adumim, just east of Jerusalem, is as big as
Tel Aviv; Ariel, the second largest settlement, has only constructed on 40 percent of the
land allocated to it in its master plan.

Settlements have also been built and expanded through the actions of
the settlers themselves. Many settlements to which the Israeli government has subsequently
committed funding and political and military protection were originally established by
groups of religious-nationalist settlers without official government authorisation.
Settlers frequently expand a settlement or establish a new one by setting up a group of
caravans on a hilltop near an existing settlement and declaring this outpost to be a new
neighbourhood of the nearby settlement. Similarly, settlers have expanded settlements by
building a road near their settlement, declaring it a security road, and
taking possession of the territory between the settlement and the new road.

It is estimated that Israel gets one-third of its annual water supply
from aquifers located in West Bank territory.Some of these acquifers straddle
the Green Line, and Israel has massively built settlements in these areas in order to
secure this territory and its valuable water resources for the state of Israel in any
final peace settlement. In the West Bank, Israeli authorities have drilled more than 40
deep-bore wells and pump 45 million cubic meters per year from West Bank acquifers for the
use of Israeli settlers -- equal to almost 50 percent of the total water consumption of
the Palestinian population in the West Bank.In Gaza, 35 wells are located in
Israeli settlements, and settlements pump some six million cubic metres.Per
capita annual water consumption among Israeli settlers in Gaza amounts to 1,000 cubic
meters, compared with 172 cubic meters per Palestinian.

Palestinians have charged water diversion has been carried out not only
to supply Israel and the Israeli settlements, but also in a deliberate attempt to thwart
the success of Palestinian agricultural endeavours and thereby encourage Palestinian
farmers to abandon their land and make it available for further settlement expansion.

Israel has acted to ensure the de facto elimination of the
border separating the Occupied Territories from Israel through a variety of means. Its
actions have enabled the residents of many Israeli settlements to avoid confronting the
reality of Israels settlement programme and the effects it has had on the
Palestinian population at whose expense it has been implemented. An extensive system of
bypass roads allows settlers to circumvent Palestinian towns and villages; political and
legal systems in the settlements are integrated with those operating in Israel; and
supermarkets, commercial centres, police stations, hotels, industrial zones, and public
bus service serve peaceful, suburban communities.

The clearest illustration of Israels efforts to eliminate the
border between Israel and the Occupied Territories is its programme of settlement building
along either side of the Green Line.Settlements along the Green Line in the
West Bank have been constructed within commuting distance of Tel Aviv and Jerusalem. In
order to further integrate the Gaza Strip and West Bank, Israel is building a 400-km.
network of bypass roads linking Jewish settlements with Israeli metropolitan centres.
According to informed sources, 30,000 dunams have so far been confiscated for 28 bypass
roads. Thirteen additional roads are reported to be in the final proposal stage. Bypass
roads enable settlers to circumvent Palestinian towns, increasing the security of the
settlers and thus encouraging the expansion of settlements. These roads also encourage
expansion by cutting commuting distances between major Israeli metropolitan centres and
settlements. Some of these roads are reserved for the exclusive use of Israeli settlers;
on others, Palestinian travel is permitted but enforcement conditions vary from day to
day, discouraging Palestinians from using the roads.

The political and legal system serving the Israeli settlements has also
been thoroughly integrated with Israels. Separate political and legal regimes have
been set up for Israeli settlers in the Occupied Territories and the Palestinian
population, in what observers have characterised as a form of legal apartheid.While Palestinians living in the West Bank and Gaza Strip were for years forced to
deal with the Israeli military authorities in these matters, settlers are served by their
own regional councils and court systems.

In 1979, the settlements in the Occupied Territories were incorporated
into a system of regional councils, consistent with the local government system in Israel,
whose jurisdiction was based on Israeli municipal and district law. There are currently 21
regional and municipal councils in the Occupied Territories (seven regional councils,
thirteen municipalities, and one city). The size of the community determines whether a
settlement will belong to a regional council or whether it will become a municipality.

Israeli military authorities have issued military orders containing the
texts of various Israeli laws verbatim to apply to Jewish settlers, thereby applying
Israeli law to the settlers in the Occupied Territories and creating a dual legal system
in the Occupied Territories. Similarly, Israeli military authorities issue military orders
applying only to the Palestinian population in the Occupied Territories and not to Jewish
settlers.

For most legal purposes, Israeli settlers are considered by Israeli law
to be residents of Israel and to be subject to Israeli law and courts. Criminal cases
against settlers are prosecuted in Israeli courts, in settlement courts, or in very rare
cases in Israeli military courts. In theory, local Palestinian courts have jurisdiction
over all persons in the Occupied Territories in cases of civil wrongs, but in practice
Palestinians are unable to initiate legal proceedings against Jewish settlers. Israeli
municipal and rabbinical courts also operate in the Occupied Territories.

Jewish settlers in the Occupied Territories are motivated by a number
of factors, including ideological, religious, nationalistic, and financial.

Religious-nationalist settlers are driven by their belief that the
Jewish people have a historic and religious right to the land which comprises the Occupied
Territories. The West Bank, known by the Biblical names Judea and Samaria in Israel, holds
significance for religious Jews as the land of ancient Israel.

Right-wing rabbis have held that Jewish law prohibits the surrender of
any part of Eretz Israel, and often express their displeasure at the presence
of the Palestinian population on Jewish land. For example, Rabbi Zalman
Melamed, chairman of the Committee of Rabbis of Judea, Samaria, and the Gaza District, has
stated that there can be no dispute that it would be ideal if the entire Land of
Israel could be settled exclusively by Jews.

This same Committee issued an appeal more than a year before the
Oslo agreement stating, [i]t has already been ruled by our rabbi, Tzui Yehuda
Kook of blessed memory, that any decision, Jewish or non-Jewish, to rob us of any part of
our land can have no validity because the Will of God will prevail. Any expectation
of making peace with Palestinians, who were referred to as animals in human
shape, is a delusion inspired by Satan.

In a letter in a brochure advertising for Netzarim settlement, another
rabbi states, as the non-Jews covet our country, we must strengthen our grip on her.
Purchasing land or houses in the Land of Israel is a religious commandment for all Israel,
so that the Holy Land will not sink into the hands of the unclean.

Religious-nationalist settlers make their homes in Eretz
Israel in order to prevent the transfer of any of the territory of the Occupied
Territories to an alternative authority and to ensure the eventual annexation and
incorporation of those territories into the state of Israel. Gush Emunim, or the Bloc of
the Faithful, is perhaps the most well-known movement representing these settlers. Formed
in 1974, it is composed primarily of religious Jews who advocate a religious Zionism which
holds that Israels conquest of the Occupied Territories demonstrates that the
messianic era has begun, and that Israels retention of these territories will hasten
the coming of the messiah. Gush Emunim, whose power increased significantly with the
election of the Likud government in 1977, acts as a settler lobby, pressuring for the
establishment and expansion of settlements in the Occupied Territories. Among the ways in
which the movement has carried this out is through the recruitment of new settlers and the
establishment of settlements without governmental authorisation.

Religious-nationalist settlers tend to conceive of Israels
settlement programme as a war for the land, a zero-sum game in which they must build on
and hold land before Palestinians are able to do the same. Settlers protest against
Palestinian building near boundaries of settlements and against Palestinian planting of
agricultural land in the Occupied Territories, perceiving these actions to be strategic
moves undertaken to thwart further land confiscation for settlement expansion. Clashes
between Palestinians and Israeli settlers over land in the Occupied Territories are
common.

The Israeli government acts with similar strategic concerns. For
example, in July 1996, the Israel Lands Administration, newly placed under the authority
of the Minister of National Infrastructure Ariel Sharon, instructed settlements to use
state lands for forestation or industrial areas in order to reduce as much as
possible the amount of state land to be transferred to the Palestinian Authority.

However, a significant number of the settlers currently residing in the
West Bank and Gaza Strip moved there not for religious or nationalistic reasons, but due
to government-mandated financial incentives for settlement in the Occupied Territories,
and other economic considerations. Cheap housing and relatively short commutes to either
Tel Aviv or Jerusalem have attracted a large number of settlers who see themselves as
Quality of Lifers. They generally live in settlements near Jerusalem or along
the Green Line. In a survey of Israeli settlers in the West Bank published in January
1996, 38 percent of those polled stated that they had moved to the West Bank for economic
reasons, 34 percent for religious or ideological reasons, 1 percent for security reasons,
and the rest for family and social reasons.

Other information gathered by the survey demonstrated that most West
Bank settlers have been well educated and have an above-average income.The
median age of the settler population is 19.7 years (compared with a median national age of
26.7 years).Seventy percent of settlers in the West Bank were born in Israel,
while 10 percent came from Asian and African countries, six percent from the former Soviet
Union, and 10 percent from Europe and North America. About 40 percent are Sephardi, and 39
percent are Ashkenazi. Of those surveyed, 21 percent had Israeli-born parents.

About 45 percent of the settlers define themselves as Orthodox or
ultra-Orthodox Jews, 20 percent as traditional, and 34 percent as secular
Jews. While 49 percent of settlers surveyed work in the West Bank, 51 percent commuted to
work inside Israel. About 20 percent of West Bank settlers also owned houses in Israel.

Acts of violence and intimidation against Palestinians carried out by
settlers in the Occupied Territories are commonplace. With virtual impunity, Israeli
settlers conduct illegal patrols, sabotage and set fire to Palestinian vehicles, destroy
Palestinian property and crops, enter Palestinian villages for the purpose of intimidating
and harassing the local population, unilaterally block roads, fire at Palestinians without
just cause, and carry out vigilante attacks to avenge killings of other Jewish settlers.

Most settlers serve in either the reserves or the regular armed forces
in the Occupied Territories, and are issued with weapons such as M-16s, Uzis, and sniper
rifles by the IDF. Settlers are required to perform their annual military reserve duty in
the area in which they live under the District Defence Regulations established in 1973,
which has had the effect of legitimising settler harassment and intimidation of
Palestinians living in areas surrounding these settlements. Under Military Order 898,
issued in March 1981, settlers are empowered to arrest Palestinians and to require
Palestinians suspected of violating a military order to present their identification
cards. Settlers have also been organised into their own regional defence network,
comprised of military units in settlements under settler command which are provided with
weapons, training, and equipment. The IDF co-ordinates with settler units in the Occupied
Territories.

Jewish settler violence against residents of the Occupied Territories
has a long history. In June 1980, an underground network of Jewish extremists known as the
Jewish Underground in the Territories, or the Jewish Terror Group, which included members
of Gush Emunim and IDF reserve officers, dynamited the cars of three West Bank mayors.
Mayor Bassam Shaka of Nablus lost both of his legs and Mayor Karim Khalaf of Ramallah was
seriously wounded by these attacks. The settlers also killed several students in an attack
on the Hebron Islamic college in July 1983, plotted to place bombs in buses in East
Jerusalem, and planned to blow up the Dome of the Rock on Jerusalems Temple Mount.
The existence of the network was discovered in May 1984. Another Jewish terror
organisation, known as TNT, planted bombs in churches and mosques in Jerusalem and opened
fire on a Palestinian bus. The organisation appeared to have connections to Rabbi
Kahanes extremist Kach Party.

Settler violence against Palestinians continues unabated in the
post-Oslo era. On 25 February 1994, Baruch Goldstein, a resident of Kiryat Arba settlement
outside Hebron, opened fire on Muslims at prayer in the al-Ibrahimi Mosque in Hebron,
killing 29 Palestinians. More recently, on 27 October 1996, Nahum Korman, an Israeli
settler and security chief of a neighbouring settlement, entered the West Bank village of
Husan and beat 10-year-old Hilmi Shushah to death. According to eyewitness accounts,
Korman kicked Shushah on the side of his head, and after Shushah fell to the ground,
stepped on his neck, beat him with the butt of his rifle, and repeatedly smashed his head
against a wall and the door of a jeep. Korman suspected Shushah of having thrown stones.
The attack was one in a series of settler attacks in the West Bank at the time,and
was suspected by some to be part of an organised campaign by settlers to scuttle the
negotiations over Hebron redeployment.

Two months later, on 1 January 1997, a 22-year-old off-duty soldier and
settler opened fire in a crowded open market in Hebron, wounding eight Palestinians, two
seriously. The settler, an Orthodox Jew called Noam Friedman, stated, I am not
insane...I wanted to kill Arabs. Hebron is ours forever and I wanted to prevent
redeployment from Hebron. In an interview broadcast in Hebrew on Israeli television,
he said that he did not have regrets for the attack and that it was for the good of
Israel.

Authorities have generally been lax in holding violent offenders
responsible for their actions and in attempting to control Jewish vigilantism in the
Occupied Territories. In the rare cases in which Jewish settlers charged with carrying out
violent attacks on Palestinians reach the court system, light sentences or dismissals
generally result.

In order to investigate the issue of settler violence against
Palestinians and the enforcement of law in the Occupied Territories, the Israeli
government established a commission of inquiry in April 1981. The results of the inquiry,
called the Karp Report, showed that in many cases incidents in which settlers had attacked
Palestinians were not brought to trial and cases were dropped after cursory
investigations. In an examination of 70 files of police investigations, the commission
found that 53 of them had come to a standstill. It concluded that police failed to
adequately investigate incidents in which Jewish settlers had been accused of harassing
and intimidating the local population and that investigations were deliberately conducted
slowly and inefficiently. The commission also determined that Israeli settlers
systematically refused to cooperate with police investigations.

Similarly, a report published by the Israeli human rights organisation
Btselem in 1994 determined that in most of the cases Btselem investigated,
opening fire was unjustified and illegal, manifesting an excessive response to
stone-throwing or other Palestinian activity, or comprising punitive action by
the settlers.

Btselem also found that [t]he IDF has continuously failed
to enforce the law on the settlers and to safeguard the life, person, and property of
Palestinians during repeated attacks by Jewish settlers. The armys attitude toward
these manifestations of violence fluctuates between voluntary non-intervention
and active forms of co-operation.It concluded that the findings of the
Karp Report regarding police handling of offences by Israeli civilians against
Palestinians continued to remain valid; in many such cases no investigation of any kind
was conducted, and those investigations that did take place rarely resulted in the filing
of any criminal charges.

While settlers in the Occupied Territories are able to carry out
violent crimes without fear of prosecution, Palestinians who commit crimes against Israeli
civilians often receive sentences drastically disproportionate to the gravity of their
crime. The West Bank Data Base Project, for example, found that settlers and soldiers
convicted of killing Palestinians were often given sentences of six to 12 months, while
Palestinians received sentences of eight to ten years for throwing gasoline bombs at
Israeli vehicles. Palestinians courts are not permitted to try settlers who have committed
crimes against Palestinians.

Wide publicity was given at the time to testimony concerning army
restrictions on treatment of settlers heard by the official commission of inquiry
established by the Israeli government after the Hebron massacre. Soldiers in Hebron told
the committee that they had received orders prohibiting them from firing at settlers under
any circumstances, even if settlers were shooting at Palestinians.

Prime Minister Rabin took only superficial action in the wake of the
massacre at the Ibrahimi mosque, choosing not to act decisively to prevent a repetition of
such violence. He instituted measures barring certain settlers from specified locations in
the Occupied Territories, placed five members of the extremist Kach party under
administrative detention, and confiscated government-issued weapons and personal gun
permits from less than 100 settlers.